The government has announced plans to shake up NHS IT in a move to save £700m.

Responsibility for applications delivered under the National Programme for IT (NPfIT) will be decentralised and devolved to local NHS strategic health authorities, the Department of Health said in a statement on Thursday. NPfIT itself will no longer be run by delivery mechanism Connecting for Health, and decisions on IT spending will be localised.

"Improving IT is essential to delivering a patient-centred NHS. But the nationally imposed system is neither necessary nor appropriate to deliver this," said health secretary Simon Burns. "We will allow hospitals to use and develop the IT they already have and add to their environment either by integrating systems purchased through the existing national contracts or elsewhere."

The £700m saving will happen over the lifetime of NPfIT, which is due to run until 2015/16, a Department of Health spokesman told ZDNet UK. Cost savings of £200m will be made through contract negotiations, while £500m will be saved by localising IT services. Costs will not be shifted from central to local budgets, said the spokesman. The position of Connecting for Health (CfH) will be reviewed, the spokesman added.

"While it is not possible to say at this point whether CfH will be the appropriate delivery mechanism [for NPfIT], it is unlikely that it will remain unchanged," said the spokesman.

National applications delivered under NPfIT such as Choose and Book, the Electronic Prescription Service, the Picture Archiving and Communications (digital imaging) System will be administered locally.